Chinese Luxury Knockoffs: How They’re Reshaping Indian Retail & Investments

Picture this, you stroll into a high-end boutique and walk out with a Hermès Birkin bag that costs as much as a car – ₹28 lakh. Wild, right? Now, imagine scrolling through your phone, and boom! You see the same exact bag, or at least the one that looks like it came from the same designer, being sold for just ₹1.2 lakh.

A luxury Birkin bag retails for over $34,000 in boutiques across Paris and New York. But today, on platforms such as TikTok, Chinese manufacturers are selling strikingly similar ‘logo-free’ versions for just $1,400. These aren’t cheap counterfeits. They’re often made in the same factories, using nearly identical leather and hardware, minus the brand insignia.

For decades, China has been the factory of the world, producing everything from electronics to designer dupes. But now, a new wave of direct-to-consumer luxury knockoffs is emerging, not from the shady lanes of Guangzhou, but from slick livestreams and viral videos.

So, what’s changed? And why should Indian investors, retailers and e-commerce players pay attention? Let’s find out.

A New Era of Knockoffs: China’s Pushback against the West

Chinese counterfeits aren’t new. But their scale, visibility and positioning have evolved dramatically in recent years, especially after the US imposed heavy tariffs on Chinese goods under the Trump administration. In response, China has found a workaround: enabling its manufacturers to bypass Western gatekeepers and sell directly to global consumers via platforms such as TikTok and X.

In 2023 alone, TikTok Shop saw a surge in sales of luxury lookalike products, many originating from Chinese SMEs. These aren’t hidden in the dark corners of the internet. On the other hand, they’re trending. Influencers walk viewers through the craftsmanship, sometimes even showing the very factories where these luxury dupes are made.

With global consumers becoming increasingly value-conscious amid inflation, the appeal is undeniable. Then why pay ₹28 lakh for a Birkin when you can get something visually identical for ₹1.2 lakh?

India: Not Just a Bystander

While most of this activity appears focused on the US and Europe for now, India is far from immune. Here’s why the ripple effects could be significant:

1. Apparel and Luxury Retail Could See Margin Pressure

India’s luxury market is growing at a fast clip. According to Euromonitor International, India’s luxury market is set to reach $85-90 billion by 2030, up from $2.5 billion in 2021. Brands like Louis Vuitton, Gucci and Dior are expanding footprints in metros. But the rise of ‘label-free luxury’ could dent aspirational buying. Urban millennials and Gen Zs, many of whom buy luxury for aesthetic appeal rather than brand signalling, might gravitate towards high-quality knockoffs. If even 5-10% of this cohort opts for alternatives, the impact on luxury retail margins could be significant.

2. Indian E-commerce Platforms Might Face an Influx of Grey Market Goods

Chinese suppliers are increasingly savvy at finding cross-border distribution channels. While platforms like TikTok are banned in India, Chinese sellers could exploit others such as Instagram Shopping, WhatsApp or local aggregators. There’s precedent. In 2021, the Indian government cracked down on 89 Chinese e-commerce apps, citing illegal trade and data misuse. But grey market activity persists. Expect platforms like Meesho, Snapdeal and even Amazon resellers to come under scrutiny if knockoff luxury finds its way into Indian carts.

3. Logistics and Courier Firms may See a Hidden Boom

Unlike legal luxury brands that rely on official supply chains, Chinese sellers often use global postal networks or third-party freight forwarders. Indian logistics players like Delhivery, Ecom Express and Xpressbees may benefit from an uptick in low-ticket, cross-border shipments.

According to a recent report by Motilal Oswal, India’s logistics market is valued at $107.16 billion (₹9 trillion) in FY23 and is expected to grow at a compound annual growth rate (CAGR) of 8–9%, reaching around $159.54 billion (₹13.4 trillion) by FY28. A surge in small-value shipments, especially to tier 2 and tier 3 cities, could accelerate this trend, even if some of the goods are unofficial.

What it Means for Indian Investors

1. Listed Retail Majors may Face Headwinds

Companies like Trent (Westside), Shoppers Stop and Aditya Birla Fashion could see their premium fashion categories come under pressure if knockoff demand erodes pricing power. While these firms still cater to middle-income consumers, their movement into aspirational luxury segments makes them vulnerable. Investors should want to watch for early signs such as markdown-driven promotions, longer inventory cycles, or muted revenue growth in premium lines.

2. Small-Cap Textile and Leather Exporters Could Benefit

Ironically, the same knockoff trend could boost Indian exporters supplying raw materials or Original Equipment Manufacturer (OEM) services to Chinese or Southeast Asian factories. Firms like Bhartiya International or Mirza International, which manufacture leather goods and accessories, might see increased demand from alternate production hubs catering to this new market. Given China+1 strategy, Indian SMEs could emerge as indirect winners of the D2C knockoff boom, especially if western brands diversify supply chains away from China.

3. Digital Marketing & Influencer Ecosystems will be Tested

Livestream commerce is booming in China. TikTok Shop alone drove $20 billion in sales in 2023 despite geopolitical setbacks. While India lacks a direct equivalent post the TikTok ban, apps like Moj, Josh and YouTube Shorts are racing to fill the void. Expect Indian influencers to be courted by offshore sellers, creating both regulatory challenges and new monetisation routes. From an investment perspective, firms like Affle India or Nazara Tech, with exposure to influencer marketing and digital commerce tools, are worth watching.

Regulatory and Ethical Headwinds are Inevitable

The line between ‘inspired design’ and intellectual property theft is razor thin. Indian authorities have historically acted against counterfeit imports, especially under the Customs Act, 1962, which empowers seizure of fake goods.

But what happens when there’s no logo or trademark violation? If a ₹1,400 bag looks like a Birkin but doesn’t claim to be one, can it be banned?

Current e-commerce rules require platforms to list sellers and ensure product authenticity. These may need tightening rules. Securities and Exchange Board of India (SEBI) and other regulators may also step in if listed companies underplay the risks of grey market exposure or revenue cannibalisation.

Final Thoughts: A Disruptive Force in the Making

Chinese luxury knockoffs are no longer relegated to back alleys or fringe websites. With factories posting live manufacturing demos and influencers flaunting ‘stealth wealth’ aesthetics, this movement is gaining mainstream traction.

From Indian retailers, e-commerce platforms, logistics players and stock market participants, the implications are varied, and in some cases, contradictory. Some may lose pricing power, while others might ride a volume boom. The smart money will be on those who can distinguish noise from opportunity.